Playfair Mining Announces Positive Updated Preliminary Economic Assessment for Its 100% Owned Grey River Tungsten Deposit
11 April 2012 - 2:30PM
Marketwired Canada
Playfair Mining Ltd. (TSX VENTURE:PLY) is pleased to announce that Golder
Associates Ltd. has completed a NI 43-101 compliant Preliminary Economic
Assessment (PEA) for Playfair's 100% owned Grey River Tungsten deposit in
Newfoundland.
The PEA indicates that Grey River is a potentially viable project that will
return a positive net discounted cash flow. No technical fatal flaws have been
identified at this level of study.
Don Moore, Playfair's Chairman and CEO comments that: "The PEA indicates that
Grey River is an economic project as shown by its positive NPV. The relatively
low pre-production capital cost of US$32 million provides a low capital barrier
for Playfair to become one of the world's few tungsten producers outside China.
I am also very excited that this PEA is based on only two of over 300 veins and
veinlets that ASARCO mapped over 50 years ago. The remaining veins have seen
little significant work to date and provide an excellent exploration
opportunity."
The PEA was prepared under the supervision of David Sprott, P. Eng., Principal
and Senior Mining Engineer with Golder Associates and Andrew Bamber, P. Eng.,
Partner/Principal Engineer with Minesense Technologies Ltd. both of whom are
Independent Qualified Persons as defined under NI 43-101. The Mineral Inventory
on which the PEA is based used CIM definitions and was prepared by Pierre
Desautels, P. Geo., Principal Resource Geologist with Desautels Geoscience Ltd.
an Independent Qualified person, as defined under NI 43-101.
The results from the updated mineral inventory indicate 1.2 million tonnes of
Inferred mineralization grading 0.730% WO3 containing 18.8 million pounds of
tungsten trioxide or 853,000 metric tonne units (MTU). The updated resources are
reported at vein width using a 0.20% WO3 cut-off with all areas grading less
than 0.2% WO3 over a 1 m minimum mining width removed from the inventory. Copper
is present in the deposit but has not been reported in the mineral inventory, so
it has been excluded from consideration in the PEA. The designated underground
mining areas are confined to the Number 10 Vein.
The Grey River number 10 Vein deposit is generally narrow and steeply dipping
with vein dip ranging from 70 to 80 degrees. A longitudinal blasthole
open-stoping method using delayed backfill was selected as the preferred mining
method. The proposed mining rate is 400 tonnes per day or 146,000 tonnes per
year.
The proposed mine access strategy is by decline, using trackless equipment.
Decline access is a modern and conventional approach that offers greater
flexibility by simplifying the task of moving personnel and equipment around the
mine. The Number 10 Vein can be readily accessed via a decline that also
substantially improves access to other nearby veins for exploration.
Dilution and ore recovery factors were applied to the inferred mineral inventory
and resulted in a total mining resource used for mine planning, design and
cashflow analysis of 1,268,306 tonnes at a grade of 0.524% WO3. This mining
resource includes planned dilution of 65%, unplanned dilution of 15% and a 95%
mining recovery. The cut-off grade of 0.35% WO3 for the Grey River deposit was
determined from key economic parameters including a tungsten price of US$16/lb
WO3, underground mining costs of US$80/tonne, and milling costs of
US$11.50/tonne. General and Administrative costs and concentrate shipment costs
were estimated to be US$15 and US$1 per tonne, respectively.
Using the base case economic parameters the pre-tax cashflow is estimated to be
positive at US$15.5 million over a mine life of about 9 years, and increases to
US$75.3 million at a tungsten price of US$21/lb. Current metal prices are close
to US$20/lb.
A summary of the project parameters used in the PEA is given in the following table:
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Parameter Value
----------------------------------------------------------------------------
Underground Mining Resource 1,268,306 Tonnes
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Mined Grade 0.524% WO3
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Mining and Milling Rate 400 tonnes per day
146,000 tonnes per year
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Plant Recovery 85%
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Total LOM Capital Costs US$50 million
----------------------------------------------------------------------------
Pre-Production Capital Costs US$32 million
----------------------------------------------------------------------------
Salvage US$2.5 million
----------------------------------------------------------------------------
Total Operating Costs US$107.50 per tonne
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A comparison of the life of mine cashflows at a base case tungsten price of
US$16/lb and also at US$21/lb (near current spot price) is given below:
----------------------------------------------------------------------------
Parameter US$16/lb WO3 US$21/lb WO3
----------------------------------------------------------------------------
Net Revenue US$199.4 million US$259.2 million
----------------------------------------------------------------------------
Total Operating Costs US$136.3 million US$136.3 million
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Net Cashflow US$15.5 million US$75.3 million
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NPV @ 5% US$2.9 million US$46.8 million
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IRR 7% 27%
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Playfair cautions that the PEA is preliminary in nature. It is based on an
inferred resource. Inferred resources are based on limited information, and
grade continuity has been assumed, but not verified. Mineral resources are not
mineral reserves and do not have demonstrated economic viability. There is no
certainty that all or any part of the mineral resource that is the subject of
the PEA will be converted into mineral reserve. No mineral reserves were
estimated as part of the PEA.
The PEA will shortly be available at www.sedar.com.
About Tungsten
Tungsten is an extremely hard, heavy, steel-grey to white metal that is
remarkable for its robust physical properties and vast uses and cannot be
substituted in many industrial applications. Tungsten has the highest melting
point of all metallic elements. Tungsten is a strategic metal and emerging
economies such as India and China are consuming increasing amounts of tungsten.
The current price of tungsten is approximately US $19.62 per pound.
Until 2005, China was the world's largest exporter of tungsten concentrate but
rapid industrialization within China, structural economic changes, and changes
in economic policies towards industry have resulted in the restriction of
tungsten exports from China. China is now the world's largest consumer of
tungsten. Escalating Chinese consumption, in conjunction with the ongoing demand
in the world's principal economies along with the supply issues noted above, has
resulted in increases in the price of tungsten by 70% over the last two years.
Tungsten prices are quoted per Metric Tonne Unit of contained tungsten trioxide
(WO3). One MTU contains 10 kilograms of WO3 and is the standard weight measure
of the tungsten trade. Ammonium Paratungstate ("APT") is an intermediate product
in the production of tungsten metal for which prices are available. A price of
US$432.50 per MTU equates to US $43.25 per kilogram or US $19.62 per pound.
Due to these Chinese export restrictions and the strong global demand for
tungsten, the management of Playfair feels that the company is very well
positioned with four high-grade deposits, all located within Canada.
Michael Moore, P. Geo., is the qualified person as defined by NI 43-101 who has
reviewed the technical information contained in this news release on behalf of
Playfair.
Visit our website at www.playfairmining.com for an internet link to the spot
Tungsten price and for more information on Playfair's Tungsten properties.
ON BEHALF OF THE BOARD
D. Neil Briggs, Director
Forward-Looking Statements: This Playfair Mining Ltd. News Release may contain
certain "forward-looking" statements and information relating to Playfair which
are based on the beliefs of Playfair management, as well as assumptions made by
and information currently available to Playfair management. Such statements
reflect the current risks, uncertainties and assumptions related to certain
factors including, without limitations, exploration and development risks,
expenditure and financing requirements, title matters, operating hazards, metal
prices, political and economic factors, competitive factors, general economic
conditions, relationships with vendors and strategic partners, governmental
regulation and supervision, seasonality, technological change, industry
practices, and one-time events. Should any one or more of these risks or
uncertainties materialize or change, or should any underlying assumptions prove
incorrect, actual results and forward-looking statements may vary materially
from those described herein.
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